| Q1: |
What
is the meaning of selling en-bloc? |
|
It means all the owners of separate
units in an apartment, condominium or even an office building, band
together to collectively sell out their properties to a developer for
comprehensive redevelopment.
|
| Q2: |
How
can an en-bloc sale be conducted? |
|
By private treaty, tender or auction.
|
| Q3: |
What
are the legal documents involved in an en-bloc sale? |
|
There are two main legal documents-the
Collective Sale Agreement and the Sale and Purchase Agreement. However,
if the property is sold by tender, then the latter would take the form
of a Tender Document.
|
| Q4: |
What
are the main steps involved in an en-bloc sale process? |
| a) |
Phase 1: Pre-Sale Preparation (2
months or more) - Owners come together to agree and sign the Collective
Sale Agreement |
| b) |
Phase 2: Public Tender Stage (1
month) - Project is up for Public Tender, and developers submit their
bids |
| c) |
Phase 3: Post Tender (1 month) -
Evaluation of bids and negotiations with developers if necessary |
| d) |
Phase 4 : Legal Completion (3 months)
- There is less than 100% agreement, more time is needed to
obtain an order from the Strata Titles Board |
|
| Q5:
|
On
the average, how long does the en-bloc sale process take? |
|
Generally, it takes about
14 months.
|
| Q6: |
What
are some of the principal terms in the Collective Sale Agreement? |
| a) |
Reserve price- the minimum price
that owners agree to sell |
| b) |
Method of distributing sale proceeds |
| c) |
The validity period of the Collective
Sale Agreement |
| d) |
Date to deliver vacant
possession, and how much can be retained by the developer till vacant
possession is delivered |
| e) |
Whether the sale will be subject
to tenancies- where owners cannot agree to sell within a fixed period
for vacant possession delivery |
| f) |
Indemnities for the Sale Committee
and between owners |
| g) |
The Sale Committee's authority to
sign plans submitted by the authority |
| h) |
Provisions for 80% or 90% majority
agreement and undertaking to pay all costs relating to the application
|
|
| Q7: |
What
happens to the deposit paid for an en-bloc sale when only the majority
owners have agreed to sell? |
|
During this time, the developer would
be awarded a conditional contract concerning the approval from the Strata
Titles Board. The deposit paid would usually be held by the vendors'
lawyer as stakeholder.
|
| Q8: |
What
is required by the Strata Titles Board to approve an en-bloc sale? |
| a) |
For developments that are less than
10 years old- the subsidiary proprietors with not less than 90%
of share values must agree to sell |
| b) |
For developments of 10 years or
more- the subsidiary proprietors with not less than 80% of
share values must agree to sell |
| c) |
"Age" taken from date of issue of
the latest Temporary Occupation Permit (TOP) or, if no TOP
is issued, then the date of the latest Certificate of Statutory
Completion is used |
| d) |
The agreement to sell
must be in writing under a Sale and Purchase Agreement, which specifies
the proposed method of distribution of the sale proceeds. |
| e) |
Not more than 3 persons must be
appointed by the majority to act jointly as their authorised representatives |
| f) |
Majority need to give an undertaking
to pay the costs of the Strata Titles Board |
| g) |
Majority need to consider the collective
sale at an extraordinary meeting |
| h) |
Advertise the particulars of the
application in four languages in the local newspapers |
| i) |
Send a copy of the proposed application
to all subsidiary proprietors, mortgagees, charges, management corporation
and place a copy under the main door of every unit |
| j) |
The notice should include a copy
of the advertisement, the Sale and Purchase Agreement, a
statutory declaration by the purchase on his relationship, if any,
to the subsidiary proprietors, minutes of the EGM, and valuation
reports on the price and method of distribution |
| k) |
Affix a copy of the notice to the
main door of units whose subsidiary proprietors have not agreed
to the sale |
| l) |
Affix a copy of the notice in the
4 official languages to a conspicuous part of each building
|
|
| Q9: |
What
actually happens before the approval of an en-bloc sale? |
|
The Strata Titles Board will consider
whether the sale was done in good faith and at arm's length. In order
to determine whether the sale was conducted fairly, the Board will consider
all the facts of the sale-such as the sale price, the distribution of
the proceeds, and the relationship between the purchaser and any of
the owners.
|
| Q10: |
What
are some examples of en-bloc sale not done in good faith? |
| An example is
where owners of larger units agree on a certain method of apportionment
which favours them and try to force the minority to agree to it. Other
questionable methods include collusion between the majority owners and
the developer; and sellers being coerced into a joint venture with the
developer. |
| Q11: |
Under
what other circumstances would a collective sale be blocked? |
|
If the minority owners are likely to
suffer a financial loss as a result of the sale going through, the Strata
Titles Board may not allow the sale.
|
| Q12: |
What
happens if there are variations in a term that are not allowed for in
the Agreement? |
|
Any variation of a term that is not allowed
for in the Agreement would require the assent of all the signatories.
|
